Evergrande Shares Plunge 79% as Trading Restarts After 17-Month Pause

China Evergrande’s Hong Kong-listed shares began trading Monday for the first time since March of last year, but the moment failed to translate to momentum as the defaulted developer’s stock dropped 79 percent in price to end the session at HK$0.35 ($0.05).

The resumption of trade followed Sunday’s release of the Shenzhen-based builder’s first-half results, which showed a narrower loss attributable to shareholders of RMB 33 billion ($4.5 billion) against RMB 64.2 billion in the prior-year period as revenue jumped 43.5 percent to RMB 128.2 billion.

Despite the six-month uptick, Evergrande flagged “material uncertainties that may cast significant doubt on the group’s ability to continue as a going concern”, with the company’s RMB 13.4 billion cash hoard dwarfed by towering liabilities on the order of RMB 2.4 trillion.

“Looking ahead, the company will firmly assume the main responsibility for self-help and risk mitigation, and strive to do a solid job of securing the delivery of properties,” chairman Xu Jiayin said in Evergrande’s filing with the Hong Kong stock exchange.

Seizing the Boomlet

In its business review, Evergrande drew attention to the group’s contracted sales of RMB 33.4 billion — up 172 percent on year-earlier levels — with an accumulated cash collection of RMB 27.1 billion for the first half of 2023.

The company “successfully seized the short boom of the property market that emerged at the beginning of the year, achieving a comparatively substantial increase in sales performance,” it said.

Evergrande had applied for a resumption of trading in its HKEX-listed shares after posting its long-awaited financial results for 2021 and 2022 last month, as the world’s most indebted developer disclosed losses of RMB 476 billion ($66.4 billion) and RMB 105.9 billion ($14.8 billion) in those respective years.

Contracted sales for 2022, which was marred by COVID-19 curbs throughout China, amounted to RMB 31.7 billion, meaning the company’s reported sales for 2023 have already eclipsed last year’s total.

Restructuring Vote Postponed

Evergrande’s immediate priority is finalising the restructuring of a $22.7 billion offshore debt load after securing agreements from holders of $19.1 billion worth of bonds in April.

Bondholders were set to vote on the proposed restructuring scheme on Monday, but in the afternoon the company announced a postponement of the so-called scheme meetings to 25 and 26 September.

Evergrande cited several causes for the extension, including continued inquiries from creditors about the proposed restructuring and the necessity of taking into account the effects of resumed share trading.

The company also reiterated its belief that a request for recognition of the restructuring process in a US court had been “wholly mischaracterised” in numerous media reports as a Chapter 15 bankruptcy filing. With the waters thus muddied, creditors need more time to consider, understand and evaluate the terms of the restructuring, Evergrande said.